Employer Identification Number (EIN)

What Is an Employer Identification Number (EIN)? A Simple Guide

An Employer Identification Number (EIN) is a unique nine-digit identifier assigned by the Internal Revenue Service (IRS) to business entities operating in the United States. The number follows a specific format of XX-XXXXXXX and serves as the business equivalent of a Social Security Number. Additionally, the EIN is also known as the Federal Employer Identification Number (FEIN) or Federal Tax Identification Number (FTIN).

The IRS issues EINs primarily for tax administration purposes. These identifiers allow the agency to track tax accounts of employers and certain others who have no employees. Furthermore, the IRS uses these numbers to identify taxpayers required to file various business tax returns.

A wide range of entities qualify for and require EINs, regardless of their size. These include:

• Limited liability companies (LLCs)
• Corporations and S corporations
• Partnerships
• Sole proprietorships
• Non-profit organizations
• Government agencies
• Trusts and estates
• Churches and church-controlled organizations
• Retirement plans
• Real Estate Mortgage Investment Conduits (REMICs)
• Farmers’ cooperatives

Once assigned, an EIN becomes a permanent identifier for the business entity. The number never expires, and importantly, the IRS never reissues the same number set to another business, even if the original employer ceases operations.

Businesses must use their EIN on all documentation sent to the IRS and the Social Security Administration. However, the IRS specifies that an EIN should be used exclusively for business activities. It must never be used in place of a Social Security Number or for purposes unrelated to tax administration, such as tax lien auctions, sales, or lotteries.

Since May 21, 2012, the IRS has limited EIN issuance to one per responsible party per day. This restriction applies across all application methods, whether online, by fax, or through mail.

For businesses operating with multiple EINs and unsure which to use, the IRS provides support through their Business and Specialty Tax Line. When contacting this service, businesses should provide all assigned numbers, the name and address associated with each, and the address of their main business location.

Businesses can use their EIN immediately upon receipt for most operational needs, including opening bank accounts, applying for business licenses, or filing tax returns by mail. If a business applies for an EIN but hasn’t received it by the time a tax return is due, they should write “Applied For” and the application date in the space designated for the number.

Who needs an EIN and why?

Many businesses and organizations are required to obtain an Employer Identification Number (EIN), while others may benefit from having one even when not legally mandated. The requirement primarily depends on business structure, tax filing needs, and operational activities.

Businesses must obtain an EIN if they:

• Have employees or plan to hire employees within the next 12 months
• Operate as a corporation or partnership
• File employment, excise, or alcohol, tobacco, and firearms tax returns
• Withhold taxes on income (other than wages) paid to non-resident aliens
• Have a Keogh plan

For specific business structures, the requirements vary considerably. All corporations and partnerships need an EIN, regardless of whether they have employees. Multi-member LLCs must obtain an EIN, whereas single-member LLCs only need one if they have employees or have elected to be taxed as a corporation. Similarly, sole proprietors generally require an EIN only if they have employees, though they may choose to obtain one for other reasons.

Beyond these mandatory cases, numerous organizations must acquire an EIN to operate legally, including tax-exempt organizations, estates, trusts (except certain grantor-owned revocable trusts), retirement plans, real estate mortgage investment conduits, and farmers’ cooperatives.

Certain business changes necessitate obtaining a new EIN. These include incorporating a business, forming a partnership, declaring bankruptcy, or purchasing/inheriting a business that you operate as a sole proprietor. Corporations need a new EIN when receiving a new charter from the secretary of state, changing to a partnership or sole proprietorship, or creating a new corporation through a merger.

Nevertheless, a new EIN is not required merely for changing a business name or location, owning multiple businesses, reorganizing to change only identity or location, or declaring bankruptcy as a corporation.

Although not always required, obtaining an EIN offers several practical advantages. It allows businesses to separate personal and business finances, open business bank accounts, and apply for business licenses. Moreover, an EIN provides additional privacy protection, as it can be used instead of a Social Security Number on various documents, potentially reducing the risk of identity theft.

The IRS explicitly states that EINs are not intended for activities unrelated to tax administration, including state tax lien auctions, sales, or lotteries. Still, even businesses not federally required to have an EIN may need one for banking or state tax purposes.

For tax filing purposes, businesses must use their EIN on all documents sent to the IRS and Social Security Administration. This identification number remains permanent for the business entity and is essential for proper tax compliance and business operations.

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How to apply for an EIN

The IRS offers several methods for businesses to obtain an Employer Identification Number, with processing times varying depending on the chosen application method. Applicants must select the most appropriate option based on their location and urgency requirements.

Online application

The online application system provides the fastest way to receive an EIN for businesses based in the United States or U.S. territories. This free service allows applicants to receive their EIN immediately upon approval. To apply online, visit the EIN application section on the IRS website and click “Apply online now”.

Important considerations for online applications:

• Applications must be completed in a single session and expire after 15 minutes of inactivity
• The system operates Monday through Friday, 7 a.m. to 10 p.m. Eastern time
• Applicants are limited to one EIN per responsible party per day
• The responsible party must have a valid taxpayer identification number (SSN, EIN, or ITIN)

Upon completion, applicants can immediately view, print, and save their EIN assignment confirmation. This immediate issuance allows businesses to promptly file returns or make payments.

Fax or mail application

Businesses can alternatively apply using Form SS-4, available for download from the IRS website. For fax applications, completed forms should be sent to the appropriate fax number based on the applicant’s location. Domestic businesses should use 855-641-6935, while international applicants should use 855-215-1627 (within the U.S.) or 304-707-9471 (outside the U.S.)[38].

Faxed applications typically receive an EIN within four business days. If providing a return fax number, the IRS will fax back a cover sheet containing the EIN.

For mail applications, send the completed Form SS-4 to the appropriate IRS address. Processing time for mailed applications is significantly longer, typically four to five weeks.

Phone application for international businesses

Phone application is exclusively available for international applicants with no legal residence, principal place of business, or principal office in the U.S. or U.S. territories. International businesses must call 267-941-1099 (not toll-free) between 6:00 a.m. and 11:00 p.m. Eastern time, Monday through Friday.

During the call, an IRS agent will request information from Form SS-4. The caller must be authorized to receive the EIN and answer questions about the form. If approved, the EIN is provided immediately during the call, with a formal confirmation letter sent afterward by mail.

Regardless of the application method chosen, applicants should never pay for an EIN, as the IRS issues them for free.

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Benefits of having an EIN

Beyond legal requirements, possessing an Employer Identification Number offers numerous practical advantages for businesses of all sizes. The benefits extend far beyond mere tax compliance, encompassing financial security, operational flexibility, and business growth opportunities.

Protecting your personal information ranks among the primary advantages of obtaining an EIN. By using this dedicated business identifier rather than your Social Security Number on official documents, you effectively reduce the risk of identity theft. This separation creates a crucial security barrier between your personal and business affairs.

Financial institutions typically require an EIN when opening business bank accounts. This requirement helps establish clear boundaries between personal and business finances, which is essential for proper bookkeeping and effective tax filing. Consequently, an EIN enables businesses to:

• Build business credit history separate from personal credit
• Apply for business loans and credit cards
• Access specialized business financial products
• Establish credibility with financial institutions

For companies planning expansion, an EIN proves indispensable as it allows businesses to hire and pay employees legally. This identifier is mandatory for issuing W-2 forms, setting up payroll systems, handling federal employment taxes, and filing quarterly tax returns. Furthermore, an EIN facilitates offering employee benefits such as health insurance, retirement plans, or stock options.

Businesses conducting international operations gain particular advantages from having an EIN. The identifier helps establish legitimacy with foreign business partners and simplifies opening bank accounts abroad. It likewise facilitates compliance with both domestic and international tax obligations when reporting foreign earnings.

For government interactions, an EIN is often required when applying for business licenses or permits. Many government contracts and grants specifically mandate businesses to have an EIN to qualify. This requirement ensures proper identification of organizations for regulatory purposes.

Notably, once issued, an EIN never expires or requires renewal. This permanence provides long-term stability for business identification needs, even as your company evolves or grows in unexpected directions.

EIN vs TIN vs SSN: What’s the difference?

Understanding the differences between tax identification numbers helps clarify their specific purposes and applications. These identifiers serve distinct functions within the U.S. tax system yet maintain important relationships to one another.

EIN: For businesses

The Employer Identification Number functions exclusively as a business identifier, formatted as a nine-digit number (XX-XXXXXXX) with a hyphen between the second and third digits. This format intentionally distinguishes it from Social Security Numbers. EINs primarily serve tax administration purposes for business entities, including corporations, partnerships, and certain sole proprietorships. The IRS issues these numbers to track business tax accounts, particularly for entities that pay employees. Unlike personal identifiers, EINs can be freely shared with vendors, clients, and other business contacts without privacy concerns. Fundamentally, an EIN creates a separate tax identity for a business entity apart from its owners.

SSN: For individuals

Social Security Numbers exist as nine-digit identifiers (XXX-XX-XXXX) assigned to U.S. citizens, permanent residents, and certain temporary working residents. The Social Security Administration issues these numbers primarily to track individual earnings and determine benefit eligibility. Unlike EINs, SSNs should be carefully protected due to identity theft risks. Individuals use SSNs when filing personal tax returns, opening personal financial accounts, and applying for government benefits. Self-employed individuals without employees often use their SSN for business purposes rather than obtaining an EIN, especially sole proprietors who file Schedule C with their personal returns.

TIN: Umbrella term

Taxpayer Identification Number serves as the comprehensive classification encompassing both EINs and SSNs, plus additional tax identifiers. The TIN category includes:

• Employer Identification Numbers (EINs)
• Social Security Numbers (SSNs)
• Individual Taxpayer Identification Numbers (ITINs)
• Adoption Taxpayer Identification Numbers (ATINs)
• Preparer Taxpayer Identification Numbers (PTINs)

Essentially, TIN represents the broader categorization rather than a distinct number type itself. When tax forms or financial institutions request a TIN, they typically accept either an SSN or EIN depending on whether the taxpayer is an individual or business entity. This umbrella designation simplifies administrative language for tax authorities and financial institutions when requesting identification.

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What to do if you lose your EIN

Misplacing your Employer Identification Number is a common concern for business owners, yet several effective methods exist to recover it. Unlike applying for a new EIN, which would be inappropriate, retrieving your existing identifier maintains proper business continuity.

Check IRS confirmation letter

Initially, locate the original EIN confirmation notice (CP 575) issued by the IRS after your application. For online applications, this document was available for immediate download and printing upon approval. The IRS also mails physical confirmation letters for applications submitted via fax or mail. In case you received an electronic confirmation, search your email archives around the application date for this crucial document.

Look at past tax returns

Prior to contacting the IRS directly, examine your business documentation thoroughly. Your EIN appears prominently on federal tax returns, typically in the upper right corner. Beyond tax documents, check your business bank statements, credit card reports, loan applications, and state license applications. Many businesses unknowingly have their EIN recorded across multiple documents. Business payroll paperwork, including any 1099 forms issued or received, consistently contains this identifier.

Call the IRS Business Line

Supposing previous methods prove unsuccessful, contact the IRS Business & Specialty Tax Line at 800-829-4933. This service operates Monday through Friday from 7:00 a.m. to 7:00 p.m. local time. Upon calling, prepare to verify your identity as an authorized business representative through several identifying questions. Once verified, an IRS representative can provide your EIN immediately over the phone. Despite potential wait times exceeding an hour during busy periods, this method remains the most definitive solution.

Key Takeaways

Understanding EINs is crucial for business owners navigating tax compliance and operational requirements. Here are the essential insights every entrepreneur should know:

• EINs are mandatory for most businesses – Required for entities with employees, corporations, partnerships, and multi-member LLCs for tax administration purposes.

• Apply online for immediate results – The IRS online application provides instant EIN approval during business hours, while fax takes 4 days and mail takes 4-5 weeks.

• EINs protect personal information – Using an EIN instead of your SSN on business documents reduces identity theft risk and separates personal/business finances.

• One EIN per business, forever – Each EIN is permanent and never expires, but you’re limited to one application per responsible party per day.

• Recovery is straightforward – Lost EINs can be found on tax returns, bank statements, or by calling the IRS Business Line at 800-829-4933.

The EIN serves as your business’s permanent tax identity, enabling everything from hiring employees to opening bank accounts. Most importantly, obtaining an EIN is completely free through official IRS channels – never pay third-party services for this basic government service.

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